Calculating optimal number of workers in the given case
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A cost minimizing firm has an output function of the form y=2K^(.5) L^.(5)
K and L are quantity of physical capital and labor employed respectively.
Rental rate of capital R = $100
Wage of Labor W= $50
If this cost minimizing firm employs 50 units of capital (k=50), how many workers does this firm employ?
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The solution describes the steps to calculate optimal number of workers in the given case.
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y=2K^0.5L^0.5
Marginal Product of capital=MPK=dy/dK=2*0.5*K^(-0.5)L^0.5= K^(-0.5)L^0.5
Marginal Product of ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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